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Presentation on theme: "Amtrak’s Long Distance Business Line"— Presentation transcript:

2 The Long Distance System15 routes, carrying more than 4.7M riders in FY 2013A vital public service:15% of ridership11% of frequencies, but 43% of passenger-miles43% of identified passengers with disabilities who use AmtrakOnly Amtrak trains in 23 of the 46 states we serveTwo trains carry a fifth of all LD passengers:Empire Builder (11.3%)Coast Starlight (10.1%)2008 DOT IG study estimated that an 85% average OTP would save $136M (in 2006 dollars)About $160M todayIn FY 2006, LD OTP was 30%I’m going to start by throwing up some of our most important statisticsI know you’re probably familiar with many of these, but we wanted to show the latest now that FY 13 is closed out so you could see how we’re doingOn the whole, I think it’s fair to say that this is very good – probably, taken as a whole, about as good a performance as we’ve ever turned inIn FY 13 we had a lot of peak or near-peak performances:RidershipOTP (almost as high as FY 12, and a big component of overall financial performance)89% cost recoveryThis is a challenging time, an exciting time – a time with a lot of great opportunities, and a lot of changeI want to talk a bit with you about what’s happening with our long distance services, and what we are going to be doing over the next couple of years to adapt and grow our ridership and revenues

3 The LD Business Line Unified organization Three geographical regionsTerminal servicesRoad operationsOn-board servicesRoute directorsAmtrak-operated commuter services (e.g., Metrolink)Three geographical regionsSouthwest (LA, Dallas, Albuquerque)Central (Chicago, Denver, St. Louis)Southeast (Richmond, Miami, New Orleans)Partnering with other business linesNEC (Silver Service, Cardinal, Lake Shore, Capitol Limited)State-supported (California Zephyr, Empire Builder, Coast Starlight, Midwestern State-supported services)Within our business line, you will see some familiar railroad functions:T&E operationsOBSTerminal servicesWe have also hired a talented group of folks for positions as “route directors”They will oversee every aspect of the service, track performance, and look for opportunities to improve andWe got a really great mix of dedicated people for these positions, with a combination of backgrounds and experience that is already helping us to develop and share good ideas for service improvementsWhile we are going to be the principal manager for three geographical regions, we will be working closely with the other business lines to run long distance trains elsewhere in the countryWe will in turn help them to run the services they are responsible forEach of us will retain P&L responsibility for our respective services, regardless of where they operate, which should promote the kind of collaborative relationships we really want to fosterP&L responsibility for all Amtrak Long Distance services

4 The LD strategic conceptDeliver value by planning and implementing an optimal mix of short and long-term initiatives to increase the effectiveness and efficiency of service delivery while improving the bottom line.Improvement OpportunitiesChallenges / RisksUnderstand areas of opportunity and develop plans to drive improvement:Employee GrowthEquipment/Facility UtilizationRoute DirectorsSafetyUnderstand areas of challenge and develop plans to mitigate risk:Increase Coach CapacityReduce Financial FootprintOptimize Process StandardizationImprove Host Railroad RelationshipsHere’s how I want to go about itThe overarching goal is revenue improvement, not simply cost reductionEfficiency is important, but we are vividly aware of the risks and problems that come from a “cut your way to success” strategyThese trains are popular – their average peak load factor is as high as Acela – and we need to find a way to satisfy the demandWe have fixed costs; our goal is to maximize the revenue returnsOne example of this is going to be the delivery of new sleepers for our East Coast servicesWe’re expecting to get 25 new sleepers for the East Coast trains over the next couple of yearsAs you probably know if you tried to get a reservation on the Cardinal at short notice, we have more demand than we can accommodateIf we can add capacity judiciously, we can get a lot more revenue for only a slightly higher cost – and that includes food and beverage revenueThere’s obviously a similar need for capacity on the Western trainsWe are looking hard at ways to augment themWe’re not trying to chop our way to success

5 Some specific challengesSean Lamb photoThe Southwest ChiefOn-time performance (OTP)There are a couple of issues that I think are going to be focal points for Amtrak, and more particularly for the LD business line, over the next few yearsOTPFood and beverage lossOn-time performance is always important, but long distance trains are naturally more vulnerable to delay and disruptionLength of tripNumber of different railroads involvedRange of potential causes (mechanical problems, train interference, infrastructure condition)Our food and beverage loss is the most heavily discussed 8% of Amtrak’s operating need, as you well knowI think we’ve turned the corner on a lot of issues, but where food and beverage costs are concerned, the challenge is realWe need to do something about it

6 Amtrak’ s Southwest ChiefColoradoKansasLa JuntaNew MexicoRoute Miles Under Review (632.4)Remainder of SW Chief RouteAt stake: service in 9 communities across three states with over 66,000 passengers in FY12Amtrak-BNSF master agreement expires January 2016.Key stretch is BNSF territory between Newton, Ks & Albuquerque., NM; currently maintained to Class 4 that will revert to Class 2 in some places.Newton – Las Animas – reduce to Class 2 for 30 mph speedLas Animas – Trinidad, Co – remain at Class 4Trinidad – Albuquerque – No Maintenance entire burden falls to Amtrak to maintain to Class 4 standards.200 million dollar total burden100 million over 10 years for annual maintenance100 million one time cost to restore bridges, culverts, rail and infrastructure to workable levels.Our position is to remain on the current route and maintain the existing relationships with current communities we serve.Other option is the Transcon that will require additional sidings, signals restrung at crossings, etc. for passenger operation.Took issue to the states of New Mexico, Colorado and Kansas for help.Kansas communities applied for a Tiger grant from the FRA that combined with matching funds from Amtrak and BNSF totals approximately 25 million…There will be a september announcement in the next 2 weeks.Colorado created state commission appointed by the governor to explore saving the train and looking to incorporate Pueblo into the mix. First meeting was just held Friday in DenverNew Mexico Legislature advanced legislation to appropriate funding to save the train. 40 million over 10 years; passed the senate overwhelmingly but wasn’t considered by the house altho the final bill included language to require N Mexico DOT to consider funding in January timeframe studying ridership, revenue potential and BNSF infrastructure needs.Gaining momentum it seems. Also need to note that Mr. Boardman and Matt Rose from the BNSF toured the areas in July and were met by very enthusiastic crowds along the entire segment of the Southwest Chief route.This route connects Albuquerque and Kansas City with Los Angeles and Chicago

10 The bottom lineAmtrak is strongly committed to the long distance servicesOur goal is to make the existing services better financial performers:More ridersMore revenueBetter cost recoveryThe decline in OTP over the past year is serious enough that it threatens every one of these goalsFixing it is Job OneWe are currently pursuing matters through the STBCN preference caseRequest to monitor train handling on freight railroadsI think it’s important to close by expressing my sense of something that we really can’t overstate: this business is important to AmtrakIt’s important to Joe BoardmanIt’s important to me – that’s why I took the jobWe know how important it is to you, and to the communities we serveOur sense of that importance underlines our strategyWe want to make this business strongerWe need to follow a strategy that will really do three things:Make our customers happyMake our bottom line betterWill underscore to Congress that this is an important, relevant, and heavily patronized service, and that Amtrak is a good steward of the public moneyI think if we can accomplish this over the next four or five years, we will put this business line on a solid footing for the future